As fraudsters grow more daring with schemes targeting businesses, Better Business Bureau (BBB) warns business owners and purchasing agents to be on the lookout for fake purchase orders. A 2017 scam targeting businesses and involving phony purchase orders cheated business owners across the United States out of more than $950,000 in reported losses.
How the Scam Works
A fraudulent business rents a virtual office and creates an online presence. It opens a bank account. It creates marketing materials that it sends to suppliers around the country. It even creates fake online entities to serve as references for them.
At first glance, this phony business seems legitimate, so when it orders merchandise, businesses fulfill the orders — only to find out later that they fell for a scam and will not be paid.
To avoid phony purchase orders, BBB advises business owners and purchasing agents to do the following.
• Watch out for unusually large orders. Scammers often target smaller businesses and place large orders, hoping the chance of profit overrides their victims’ judgment. Large orders, particularly from new customers, are often a red flag.
• Be leery of email-only solicitations. Many scams have roots overseas. Watch out for situations where email is the only form of contact. Also, be on the lookout for misspellings and grammatical errors in solicitations you receive.
• Do your research. Visit www.bbb.org to research businesses looking to do business with you. Keep in mind that business identity theft is a growing issue; fraudsters often impersonate legitimate businesses in the hopes of defrauding unsuspecting businesses.
• Confirm everything. If you receive an order from a potential new customer, even a business with an established track record, it’s a good idea to verify the order directly with the company. Make sure you are using accurate contact information and do not just use the phone number on the purchase order you have received.
• Make sure the references are real. In this day and age, creating fake online entities is fairly easy. When you are doing your research, go beyond a simple phone call. Do an Internet search on the company seeking to do business with you, as well as its references. Legitimate companies should have a digital “footprint.” If you can’t find much on a given company, it could mean it is new, or it could mean it is not what it seems.
• Trust your instincts. A business owner who recently received a fake purchase order said the size of the order raised a red flag. So did the fact that the business was not asked for a competitive bid. In addition, BBB regularly hears from consumers and business owners who state they “just knew something was wrong,” but failed to heed that instinct. If something seems off to you, pay close attention to that feeling.
• Have a process in place. When it comes to handling orders, make sure you have a reliable system in place to vet and verify those orders and that all of your staff are fully trained to follow this process.
Angie Barnett is president and CEO of the Better Business Bureau of Greater Maryland. She can be reached at 410-347-3990 and firstname.lastname@example.org